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The U.S. Department of Education has announced it will resume aggressive collection efforts on defaulted student loans, starting May 5. These efforts include wage garnishment and other involuntary methods, such as seizing tax refunds and Social Security benefits, through the Treasury Department’s offset program. This move will affect potentially millions of borrowers as the government ramps up efforts to recover outstanding federal student debt.
According to the Department of Education, over five million borrowers are currently in default, with another four million at risk of joining them in the coming months. This troubling trend means that nearly 25% of the federal student loan portfolio could soon be in default. The department also highlighted that fewer than 40% of borrowers are up to date on their loan payments, indicating a widespread repayment crisis.
Borrowers who are already in default will soon receive email notifications outlining their next steps, along with information about available repayment options. Wage garnishment orders are scheduled to follow later this summer, marking the first wave of collections since federal student loan payments were paused in March 2020 at the start of the COVID-19 pandemic. This payment freeze, extended by the Biden administration, finally ended in October 2024.
During his presidency, Joe Biden attempted to eliminate student loan debt for millions, but those efforts were largely blocked by the courts, including a 2023 Supreme Court decision. Nevertheless, his administration has managed to cancel debt for over five million individuals through targeted forgiveness programs. Despite these actions, Education Secretary Linda McMahon accused the Biden administration of giving borrowers false hope about sweeping debt relief.
McMahon emphasized that moving forward, the student loan system would be administered strictly within legal boundaries. She stated that the Departments of Education and Treasury are committed to guiding borrowers back into repayment, not only to restore personal financial stability but also to support the broader economy. The Department made it clear in its statement that broad-based student loan forgiveness is no longer on the table.